A formulary is a list of prescription drugs, both generic and brand name, that are available through your health plan. Having a well-designed formulary is a huge benefit to companies, because the employees that subscribe to the plan will have a strong mix of quality and affordability to choose from with their prescription drugs.
“With an intelligent formulary design philosophy, you can ensure your plan adheres to a disciplined, conservative approach to new drugs rooted in evidence-based clinical data,” says Chronis Manolis, vice president of pharmacy services for UPMC Health Plan.
Smart Business learned more from Manolis about how intelligent formulary design works and how it can help your company be more cost-effective.
What is intelligent formulary design?
Ideally, a drug formulary should provide quality for patients through availability of medications that maximize value relative to costs. High quality that is also affordable is the goal of intelligent formulary design. When the formulary is multi-tiered, with selective non-covered categories, it offers members incentives to use generic drugs when available and ‘preferred’ brand drugs when generics are not available within a therapeutic category.
Why is it important that a formulary have a strong generics component?
By having a strong generics component, formularies can be poised to take advantage of opportunities such as the expected $60 billion in brand drugs that will go generic through 2012. An estimated $8.8 billion could be saved if there were a broad substitution of generic medications for brand drugs, according to a report published in Annals of Internal Medicine.
How does an intelligent formulary operate?
A panel of experts determines which drugs will be on the formulary. The panel of experts reviews new and existing medications based on safety and clinical effectiveness. Once clinical effectiveness is established, the committee then selects the most cost-effective drugs in each therapeutic class. A therapeutic class is a group of medications that treat specific health conditions or work in a certain way, such as beta blockers used for the treatment of various cardiovascular conditions.
Making decisions of this kind is not always easy or automatic. Many times, when a new drug is introduced it gets a lot of attention. Much of that attention comes from aggressive direct to consumer advertising. In many instances, there is pressure put on a health plan to ‘jump on the bandwagon,’ so to speak, and add the drug to its formulary.
However, with an intelligent formulary design philosophy, you can ensure your plan adheres to a disciplined, conservative approach to new drugs rooted in evidence-based clinical data before deciding to add any drug to its formularies.
